The Virtues of Uber’s Operation SLOG

Last week, Casey Newton, a writer at the Verge, published details about an unusual recruitment campaign launched by Uber, the car-hire service that since its founding, in 2009, has grown to have a valuation of just under twenty billion dollars. According to the report, Uber asked some of its drivers, who operate as independent contractors, to take rides using Lyft, a smaller competitor, and use their time in the car to try to persuade Lyft drivers to come work for Uber. The Uber recruiters could earn hundreds of dollars for each new driver they recruited. The Verge account contains lots of great details, including a document suggesting that Uber contractors appeal to Lyft drivers by mentioning that Uber has a “more polished clientele.” (An Uber spokeswoman pointed me to a blog post in which the company acknowledged that it uses drivers for recruitment.) The scheme was called Operation SLOG.

The revelation of Uber's brazen campaign comes in the midst of a broader, high-profile debate about hiring in Silicon Valley. In 2010, the Department of Justice investigated several Silicon Valley companies, including Apple, Google, Intel, and Adobe, for allegedly doing the opposite of what Uber has done: agreeing not to poach employees from one another. (“If you hire a single one of these people that means war,” Apple’s C.E.O. at the time, Steve Jobs, warned the Google co-founder Sergey Brin, according to court papers.) The Justice Department later settled with the companies, but engineers opened a class-action lawsuit against several of them, and earlier this year the parties agreed to a settlement of three hundred and twenty-four million dollars. Last month, Judge Lucy H. Koh of the United States District Court in San Jose rejected the settlement because she felt it didn’t fall “within the range of reasonableness.” The plaintiffs had cited damages of three billion dollars; in that context, Koh felt the settlement amount was too small.

To a casual observer, Uber’s actions and those of the companies named in the class-action suit might seem equally—if differently—wrong. After the Verge published its report about Operation SLOG, TechCrunch’s Alexia Tsotsis tweeted, “This has to be an FTC violation.” Gabriel Snyder of Bloomberg called it “anti-competitive.” The reaction is reasonable. Apple, Google, and the others are alleged to have sneakily and aggressively colluded with one another to keep their workers from moving around too much, while Uber appears to have sneakily and aggressively tried to hire people who worked for its main rival.

Uber’s campaign, like the anti-poaching pacts, appears to have been well-orchestrated. The company gave contractors special phones, credit-card numbers, and detailed instructions to avoid letting on to Lyft that it was trying to hire its drivers, according to documents obtained by the Verge. One e-mail outlines the recruitment process: request a Lyft using a temporary phone number and credit card, get in the car and start chatting with the driver (“Do you like Lyft?” “What would you change about Lyft?”), ask the driver if he might consider driving for Uber, and, if the answer is yes, fill out a form with details about the driver, including contact information and a screen shot of his Lyft profile. If the answer is no, pay for the ride and get dropped at the curb.

But sneakiness isn’t against the law; neither is aggressiveness, or launching a well-organized campaign. The alleged collusion on the part of Apple, Google, and the others is not seen as a potential violation of antitrust law because the companies tried to avoid detection, or because of e-mails like the one Jobs sent, or because the companies kept a close eye on who they could or could not solicit. The problem was that the companies, by promising not to poach employees from one another, may have suppressed competition in the labor market—and, in turn, lowered the wages of the tech workers who weren’t able to move to better-paying jobs or to start bidding wars over their wages. In other words, Apple, Google, and their allies are alleged to have behaved in a manner that hurt the greater good.

There is one aspect of Operation SLOG that might have been similarly harmful: according to the Verge, Uber reps occasionally cancelled Lyft rides in order to keep Lyft from detecting what they were doing—which, if true, likely wasted Lyft drivers’ time and kept them from making as much as they otherwise might have. But by going after Lyft drivers, Uber is generally doing the opposite of what Apple, Google, and the others did. Just as those companies’ behavior may hurt workers, Uber’s campaign could be good for drivers, who are free to work for whomever they like. Persuasive as Uber’s contractors may be, they’re unlikely to woo someone from another service unless they can show that driving for Uber would benefit the driver—because it pays well or offers extra benefits, or for some other reason. Uber and Lyft have long fought aggressively over talent, in ways that generally seem to benefit drivers most of all: in May, Uber offered bonuses of five hundred dollars to Lyft drivers who joined Uber; in response, Lyft gave five-hundred-dollar bonuses of its own to some drivers. “Uber and Lyft are competitors, and they’re perfectly entitled to try to convince each others’ drivers to come work for them,” Daniel Crane, a law professor at the University of Michigan and an expert on antitrust law, told me. “People don’t like their employees to be poached; that’s different from saying you shouldn’t do it.”

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